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BLUE OCEAN STRATEGY SIMULATION Introducing StratX’s Latest Strategy Simulation Theory by W. Chan Kim & Renée Mauborgne Simulation Design and Development by

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Page 1: Boss presentation Games

BLUE OCEAN STRATEGYSIMULATION

Introducing StratX’sLatest Strategy Simulation

Theory by

W. Chan Kim & Renée Mauborgne

Simulation Design and Development by

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Table of Contents

Blue Ocean Strategy Overview

Blue Ocean Strategy Simulation Overview

Using BOSS in your Class

About StratX

Contact Us

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BLUE OCEAN STRATEGY THEORYOVERVIEW

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BLUE OCEAN STRATEGY AUTHORS

W. Chan Kim is The Boston Consulting Group Bruce D. Henderson Chair Professor of Strategy and International

Management at INSEAD, France (the world’s second largest business school). Prior to joining INSEAD, he was a professor at

the University of Michigan Business School, USA. He has served as a board member as well as an advisor for a number of

multinational corporations in Europe, the U.S. and Pacific Asia. He is an advisory member for the European Union. He was

born in Korea.

Kim is a fellow of the World Economic Forum. His Harvard Business Review articles, co-authored with Renée Mauborgne,

are worldwide bestsellers and have sold over a half a million reprints. Their Value Innovation and Fair Process articles were

selected as among the best classic articles ever published in Harvard Business Review. They have co-authored articles in The

Wall Street Journal, The Wall Street Journal Europe, The New York Times, The Financial Times, The Asian Wall Street

Journal, and numerous journals.

Kim has published numerous articles on strategy and managing the multinational which can be found in: Academy of

Management Journal, Management Science, Organization Science, Strategic Management Journal, Administrative Science

Quarterly, Journal of International Business Studies, Harvard Business Review, Sloan Management Review, and others. He is

the co-author of Blue Ocean Strategy: How to Create Uncontested Market Space and Make the Competition Irrelevant

(Harvard Business School Press, 2005).

Kim is a winner of the Eldridge Haynes Prize, awarded by the Academy of International Business and the Eldridge Haynes

Memorial Trust of Business International, for the best original paper in the field of international business. He was selected

for Thinkers 50, the global ranking of business thinkers, and was named along with his colleague Renée Mauborgne, as “the

number one gurus of the future” by L'Expansion, one of France's leading business magazines. The Sunday Times (London)

called them “two of Europe’s brightest business thinkers… Kim and Mauborgne provide a sizeable challenge to the way

managers think about and practice strategy.” The Observer called Kim and Mauborgne, "the next big gurus to hit the

business world."

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BLUE OCEAN STRATEGY AUTHORS

Renée Mauborgne is The INSEAD Distinguished Fellow and a Professor of Strategy and Management at

INSEAD, France (the world's second largest business school). She was born in the United States.

Mauborgne is a fellow of the World Economic Forum. Her Harvard Business Review articles, co-authored with

W. Chan Kim, are worldwide bestsellers and have sold over half a million reprints. Their Value Innovation and

Fair Process articles were selected as among the best classic articles ever published in Harvard Business

Review. They have co-authored articles in The Wall Street Journal, The Wall Street Journal Europe, The New

York Times, The Financial Times and numerous journals.

Mauborgne has published numerous articles on strategy and managing the multinational which can be found

in: Academy of Management Journal, Management Science, Organization Science, Strategic Management

Journal, Administrative Science Quarterly, Journal of International Business Studies, Harvard Business Review,

Sloan Management Review and others. She is the co-author of Blue Ocean Strategy: How to Create

Uncontested Market Space and Make the Competition Irrelevant (Harvard Business School Press, 2005).

Mauborgne is a winner of the Eldridge Haynes Prize, awarded by the Academy of International Business and

the Eldridge Haynes Memorial Trust of Business International, for the best original paper in the field of

international business. In 2005 she was selected as the highest placed woman on Thinkers 50, the global

ranking of business gurus, and was named along with her colleague W. Chan Kim, as "the number one gurus of

the future" by L'Expansion, one of France's leading business magazines. The Sunday Times (London) called

them "two of Europe's brightest business thinkers. Kim and Mauborgne provide a sizeable challenge to the way

managers think about and practice strategy." The Observer called Kim and Mauborgne, "the next big gurus to

hit the business world."

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BLUE OCEAN STRATEGY KEY POINTS

BOS is the result of a decade-long study of 150 strategic moves spanning more than 30 industries over 100 years (1880-2000).

BOS is the simultaneous pursuit of differentiation and low cost.

The aim of BOS is not to out-perform the competition in the existing industry, but to create new market space or a blue ocean, thereby making the competition irrelevant.

BOS offers a set of methodologies and tools to create new market space.

While innovation has been seen as a random/experimental process where entrepreneurs and spin-offs are the primary drivers – as argued by Schumpeter and his followers – BOS offers systematic and reproducible methodologies and processes in pursuit of innovation by both new and existing firms.

BOS frameworks and tools include: strategy canvas, value curve, four actions framework, six paths, buyer experience cycle, buyer utility map, and blue ocean idea index.

These frameworks and tools are designed to be visual in order to not only effectively build the collective wisdom of the company but also to effectively execute a strategy through easy communication.

BOS covers both strategy formulation and strategy execution.

The three key conceptual building blocks of BOS are: value innovation, tipping point leadership, and fair process.

© Kim & Mauborgne, 2007

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RED OCEAN VS BLUE OCEAN STRATEGY

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BLUE OCEAN STRATEGY METHODOLOGIES & TOOLS

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BLUE OCEAN STRATEGY SIMULATION OVERVIEW

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WHAT IS BLUE OCEAN STRATEGY SIMULATION ?

A computerized strategy game illustrating Blue Ocean Strategy concepts, methodologies & analytical tools

Participants work in team to manage a fictitious company for several years in the Game Console industry

They are offered ways to swim out of the red ocean filled with sharks

The BOS theory, tools and frameworks allows them to break away from the competition and create a blue ocean of new market space for their company

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BOSS INCLUDES A MAXIMUM OF 4 DECISION ROUNDS

Each Round brings new challenges to the students Round “Red”: management of their existing “Red Ocean” productRound “Blue 1” : creation of a high value and low cost “Blue Ocean” product offering comprising competing factors beyond those upon which the industry competesRound “Blue 2” : refining their offering and further unlocking demand through the right Strategic PriceRound “Blue 3” : extending their Blue Ocean using Service and Delivery platforms and dealing with the presence of low-priced new competitors

2008 2009 2010 2011 2012 2013 2014 2015

Round Red

3 runs of one period each

Round Blue 11 run

RoundBlue 22 runs

2016

RoundBlue 3 3 runs

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BOSS ROUND REDBEATING COMPETITION INTHE EXISTING MARKET

2008 2009 2010 2011 2012 2013 2014 2015

Round Red

3 runs of one period each

Round Blue 11 run

RoundBlue 22 runs

2016

RoundBlue 3 3 runs

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ROUND RED FOCUSES ON THE EXISTING MARKET

The team objective is to compete in the Red Ocean and outperform their competitorsStudents familiarize with the market and industry; with their organization and its history; with their customers & competitorsThey have access to lots of data in their Annual Report and Market Studies:• Company and Brand P&L; Company and Brand Key Performance Indicators; Sales and

Market Shares; Customer Preferences; Benchmarking Information; Market Forecast; etc…

Then they form a strategy and execute it through multiple decisions:• Innovation and R&D; Corporate projects; Production; Segmentation Strategy;

Marketing; Geographical Expansion and Distribution Coverage; Finance

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ROUND RED – KEY LEARNING POINTS

As competition is limited to existing market, the key objective is to increase market share and gain economies of scaleThe key success factors in Round Red are:• Identify & target most attractive consumer groups. • Data-driven analysis based on traditional market research• Continuously optimize products (Raise/Reduce) for fast changing customer needs. • Invest massively in marketing to build awareness and interest. • Compete on price

Company results are poor• Only moderate increase in market

share as competition is tough• Price pressure• Low market growth• Strong decrease in profits due to R&D,

decreasing price, increased marketing

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BOSS ROUND BLUE-1CREATING A BLUE OCEAN

Round Red

3 runs of one year each

Round Blue 11 run

RoundBlue 22 runs

RoundBlue 3 3 runs

Year 41 Year 42 Year 43 Year 44 Year 45 Year 46 Year 47 Year 48 Year 49

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ROUND BLUE-1 FOCUSES ON THE CREATION OF A HIGH VALUE/LOW COST “BLUE OCEAN” PRODUCT OFFERING

• Students must draw the current industry Value Curves, discuss the shape of all Curves and draw a conclusion about the industry’s overall Value Curve

Visual Awakening

• Students must read and debate the outcome of the Visual Exploration conducted by the Executive Team

Visual Exploration

• Students must decide which Competing Factors must be Eliminated, Reduced, Raised or Created

Four-Action Framework and

ERRC Grid

• Students must create a Blue Ocean product, deciding what level to offer for each of the existing or created Competing Factors.

To-Be Strategy Canvas

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BOSS SAMPLE CHART – VISUAL AWAKENINGDRAWING THE AS-IS STRATEGY CANVAS

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BOSS SAMPLE CHART – VISUAL AWAKENING AUTOMATED FEEDBACK ON AS-IS CURVES

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BOSS SAMPLE CHART – VISUAL EXPLORATIONTRANSCRIPT OF NONCUSTOMER INTERVIEWS

These parents were dead against the way video games can absorb their kids’ ‘childhood hours’.  They said that when their children were supposed to be researching school material…  They were certainly not going to exacerbate the problem by buying a video gaming console.  They felt that they had lost control over what their children were doing…

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BOSS SAMPLE CHARTTHE ELIMINATE-REDUCE-RAISE-CREATE GRID

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BOSS SAMPLE CHARTTO-BE STRATEGY CANVAS

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ROUND BLUE-1 KEY LEARNING POINTS

The Six Paths reveals ways to reconstruct boundaries and open up avenues to noncustomers which, if followed, allow an organization to create and capture new demand.

Searching for commonalities across noncustomer types allows organizations to see how to collapse Strategy Canvases and capture a far greater share of noncustomers than would creating a strategic offering for a single large type of noncustomers.

By reconstructing market boundaries and focusing on the 4 Action Framework of Eliminating, Reducing, Raising and Creating, organizations are able to achieve differentiation and low cost – these are no longer tradeoffs.

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BOSS ROUND BLUE-2REFINING THE BLUE OCEAN AND SETTING THE STRATEGIC PRICE

Round Red

3 runs of one year each

Round Blue 11 run

RoundBlue 22 runs

RoundBlue 3 3 runs

Year 41 Year 42 Year 43 Year 44 Year 45 Year 46 Year 47 Year 48 Year 49

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STUDENTS ARE COACHED BY THEIR PROFESSOR AND BOSS PROVIDES THEM WITH AUTOMATED FEEDBACK

Your Blue Ocean offering includes the competing factor “Multimedia Add-ons".Although this factor has appealed to some noncustomers, it provides low additional value to the vast majority of noncustomers. As a result, you lost some margin without creating additional sales.

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ROUND BLUE-2 KEY LEARNING POINTS

All learning points of Round Blue-1 still apply, plus :

In reality, organizations may not get the Strategy Canvas right the first time, due to the traditional practice of most companies of ‘Raising’ and ‘Reducing’ their offering level along the traditional factors of competition.The importance of Strategic pricing and the price corridor of the mass is highlighted. It is crucial to set the right strategic price at the first moment of market entry to capture the mass of buyers.There are many cases where the failure to price strategically has led to demand remaining locked, and a lack of pressure on new entrants and competitors – eg the first mobile phones, the X-box. Organizations will traditionally price too high when they have an innovation of any sort believing that their innovation has created a differentiation desired in the market

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BOSS ROUND BLUE-3BREAKING AWAY FROM THE COMPETITION AGAIN

Round Red

3 runs of one year each

Round Blue 11 run

RoundBlue 22 runs

RoundBlue 3 3 runs

Year 41 Year 42 Year 43 Year 44 Year 45 Year 46 Year 47 Year 48 Year 49

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BOSS SAMPLE CHARTEXTENDED TO-BE STRATEGY CANVAS

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ROUND BLUE-3 KEY LEARNING POINTS

Dramatic profit growth is dependent primarily on the strategic move and not on any inherent capability within the organization: there are no permanently good organizations, they are only as good as their strategic moves. Blue Oceans can become Red: to be successful, organizations must stretch for Blue Ocean again.Organizations have the option to create Blue Oceans in Service and Delivery, not only in their Products, as most traditionally think. They can be very successful by rotating the creation of Blue Oceans between Product, Service and Delivery platforms and keep growing the size of their Blue Ocean. Most organizations limit their strategic options by focusing on only one dimension of strategy.At different points in time and focusing on different platforms (Product, Service and Delivery), applying the Six Paths will reveal different insights. Thus, the executive team needs to go back to the market to get new information about noncustomers and customers to be able to keep creating Blue Oceans.Invest heavily in marketing to confound competitors and gain volume of margin through geographic expansion

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USING BOSS IN YOUR CLASS

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BENEFITS FOR STUDENTS & PARTICIPANTS

BOSS is a fun, innovative and highlyeffective tool to learn, practice and experience Blue Ocean Strategy

BOSS will provide a deeper understandingand higher retention of Blue OceanStrategy theory, methodologies and tools

The competition across teamsparticipating to the BOSS exercise willlead to a high level of excitement &enthusiasm

BOSS corporate participants will be much more ready to lead a BOS initiative in their company

BOSS is the perfect tool to bring together cross functional teams in company specific programs before they work on actual projects

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What are the benefits for professors?

Students or executives will love your course! The fast pace and hands-on experience

creates an intense energy, making participants eager to apply their new skills. It’s a lot

of fun, but also hard work. Students and executives find the combination irresistible.

BOSS comes with a full range of Instructor’s materials, which allows you to easily

monitor and control the progress of your teams and highlight key learning points,

round after round.

BOSS couldn’t be easier to administer. Its indirect competition setting provides you

with total flexibility on the number of teams, allowing BOSS to work with any class size.

StratX online support is available to meet your needs and optimize your pedagogical

experience!

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PEDAGOGICAL MATERIALS

BOSS SoftwareInstructor’s Website• Course creation & management, team activity monitoring, debriefing and

ranking charts, etc.

Guides (all available online with printer-friendly version)• BOSS handbook; Introduction to reach Round;• Instructor’s Guide

Powerpoint presentations for instructor• Introduction to Blue Ocean Strategy theory, by Kim & Mauborgne• Introduction to each Round• Sample debriefing for each Round

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2 SCENARIOS TO ADAPT TO YOUR SCHEDULE CONSTRAINTS

33

Round Red

3 runs of one period each

Round Blue 11 run

RoundBlue 22 runs

RoundBlue 3 3 runs

ALL ROUNDS4 Sessions

Round Blue 11 run

RoundBlue 22 runs

RoundBlue 3 3 runs

BLUE-ONLY3 Sessions

RoundsBlue 1 & 2

3 runs

RoundBlue 3 3 runs

BLUE-ONLY2 Sessions

RoundsBlue 1 & 2

3 runs

RoundBlue 3 3 runs

ALL ROUNDS3 Sessions

Round Red

3 runs of one period each

Scen

ario

VG

CR1B

3Sc

enar

io V

GCR

1B2

Year 41 Year 42 Year 43 Year 44 Year 45 Year 46 Year 47 Year 48 Year 49

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SAMPLE SCHEDULE

Round Activity Where Duration

Red

Pre-Reading : BOSS Handbook & Introduction to Round Red online 30’

Introduction to Round Red + Organization of teams Class 1h00'

BOSS Session – Round Red – Instructor available for consultation Workgroup 2h00’

Blue-1

Pre-Reading : Introduction to Round Blue-1 Online 30'

Debriefing of the previous Round resultsIntroduction to BOS Theory & Introduction to Round Blue-1 Class 1h15'

BOSS Session – Round Blue-1 – Instructor available for consultation Workgroup 2h00’

Blue-2

Pre-Reading : Introduction to Round Blue-2 Online 30'

Debriefing of the previous Round resultsIntroduction to Round Blue-2 Class 1h00'

BOSS Session – Round Blue-2 – Instructor available for consultation Workgroup 2h00’

Blue-3

Pre-Reading : Introduction to Round Blue-3 Online 30'

Debriefing of the previous Round resultsIntroduction to Round Blue-3 Class 1h00'

BOSS Session – Round Blue-3 – Instructor available for consultation Work group 2h00’

BOSS Conclusion and Final Debriefing Class 1h00'

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IS BOSS SUITED TO MY COURSE AND AUDIENCE?

BOSS has been designed with a particular focus on Strategy, Management, Innovation and Entrepreneurship courses

BOSS can handle groups of any size and thus can easily be integrated in large core courses or smaller elective courses

BOSS can be used at the graduate, MBA or Executive education level

Different licensing options will be available to suit different types of courses.